New report shows China maintains momentum in its clean revolution

20 August 2009

Despite economic downturn, China's domestic markets continue to scale-up low carbon technology

A new report by The Climate Group shows that in an incredibly short space of time China has taken the lead in the race to develop and commercialize a range of low carbon technologies.

On the back of ambitious government policies and a new breed of entrepreneurs, Chinese businesses are amongst the top producers of electric vehicles, wind turbines, solar panels and energy efficient appliances. Even with this growth, the opportunities for Chinese and foreign companies are huge. A successful agreement in Copenhagen later this year will open the door to further collaboration and growth.

Building on The Climate Group's 2008 report, the new report, China's Clean Revolution II: China's opportunity for a low carbon future is a synthesis of the latest information on China's progress towards a low carbon economy and aims to keep a-pace with a rapidly evolving green agenda in China, as well as expanding to cover new industries including geothermal power.

In the last year, the global economic turndown has hurt China's exports of renewable and low-carbon technologies and created a new impetus to expand its domestic markets. The Chinese government's 4 trillion Yuan (US$ 585 billion) stimulus package put a strong emphasis on clean development and is backed by many new laws and policies focused on increasing the uptake of low carbon technologies.

The report examines four key areas of China's low carbon economy: low carbon vehicles, energy efficiency in industry, renewable energy and low carbon buildings and urban design. In each of these areas Chinese businesses, supported by the Chinese government, are demonstrating solid progress*:

. Thirteen Chinese cities have signed up to a government scheme to purchase 13,000 electric vehicles (EVs) this year in total. The aim is to manufacture half a million EVs in China in 2011;
. The energy intensity of the Chinese economy has fallen by over 60% since 1980, and the government has set a goal of reducing it by a further 20% between 2005 and 2010;
. Internationally, mainland China supplies 30% of the world's solar PV technology (Greater China, including Taiwan, 40%); domestically, China is the largest wind power generator in Asia and fourth in the world;
. China's energy conservation goals include a 50% energy conservation standard for all new buildings and a 65% standard for new buildings in some major cities by 2010.

Liu Yanhua, Vice Minister of China's Ministry of Science and Technology of China says, "Along with the penetration of efforts on energy-saving and emissions reduction in addressing climate change, China has made remarkable progress: China's installed wind power capacity is doubling annually; China has produced nearly 40% of the world's solar PV products; China has the world's largest raw material resource for bio-fuel; and China's auto industry is working to lead the world's new energy automotive industry."

The report also acknowledges the barriers that exist to China realizing its low carbon economy. China is struggling hard to catch up with international peers and to move from lower-end to higher-end technology, but technological and political gaps still exist. Creative, market-based financing mechanisms are also required. It is estimated that China will need to invest 1.8 trillion Yuan (US$ 263 billion) a year to meet its energy conservation and emissions reduction goals.

Changhua Wu, Greater China Director at The Climate Group says, "It's a 70-30 situation. We have 70% of the solutions today, but they are not all proven technologies and none are at the scale we need. 30% of the solutions will be found in the future. Therefore we still need foreign investment to drive the revolution."

As both a major emitter and provider of the solutions to climate change, China's role at the heart of the international climate negotiations is essential to their success and their ability to accelerate the transition to a prosperous low carbon global economy.

Speaking from the launch event in Beijing, former UK Prime Minister and partner of The Climate Group's Breaking the Climate Deadlock initiative, Tony Blair says, "To beat climate change, we all can and must do more. As well as extending the technologies we already have, we need to speed up the development of important new ones, like carbon capture and storage, large scale solar power and smart grids that will all be essential after 2020. A new global climate agreement will set a route map for this to happen and for our journey to a prosperous low carbon 21st century. As one of the world's major economic powers, China will have to be at the forefront of this journey. This report shows that it can be."


* China's Clean Revolution II draws on a wide range of sources, including government reports, independent academic analysis, news reports, interviews and informal conversations. While every effort has been made to present a balanced account with information corroborated where possible, some evidence - in particular the most recent information - is inevitably circumstantial.

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